How to build 50,000 homes a year in London

There's more than enough brownfield land in London to meet our housing needs -
if we can only unlock it

The laws of supply and demand have caught up with us

By Zac Goldsmith

5:58PM BST 28 Sep 2015

Last week, Chancellor George Osborne gave his strongest hint yet that he is prepared to back Crossrail 2, which will connect Surrey and Hertfordshire. After the decades of delay over the first scheme, this is a mark of how far London has come in the last seven years.

"The capital needs to be given more responsibility to turn its strengths to the advantage of those who make it, and the UK, strong"

Ours is a global capital for financial services, tech, media and culture. Its strength lies in its businesses – all 934,000 of them . They are fundamental to London’s magnetic pull, luring investment from across the world.

But here also lies the problem. Because people want to live and work in London, its population is set to rise to 10 million by 2030. That’s an additional 1.5 million people needing homes, jobs and space on our transport system. Without radical change in the way we build homes, London will cease to be liveable for the very people who make it so successful.

The laws of supply and demand have caught up with us. Consider the maths: according to official figures, the average first home now costs a Londoner £412,000, requiring a salary of £85,000 to buy. Anyone wanting to save for a deposit will either struggle, given most are spending well over half their income on rent, or be forced to move – piling pressure on our transport network and draining productivity as people are forced into longer daily commutes.

We need to ramp up our efforts to meet these housing challenges. And to do that, we need to consider planning, land and finance. Planning is a political problem, solved by a mayor working with local authorities.

There is no shortage of land. For one thing, a large portion of the Fifties and Sixties housing estates in London are reaching the end of their lives. There are 3,500 such estates in the capital: if only a fraction were redeveloped to produce low-rise, high-density streetscapes we would generate enough new housing to cater for our needs for many years. It would take time, and existing communities would need to be thoroughly on-board and protected.

But that’s just a start. The Mayor and Government have launched a land commission for London, to identify all publicly owned brownfield land. It is expected to uncover vast swaths of the capital that could be developed. We know, for example, that Transport for London alone owns the equivalent of 16 Hyde Parks.

Which leaves finance. The one thing we all realise about London and the South East is that people want to invest in it – particularly in property. In a frighteningly volatile and unstable world, London’s property market is seen as a safe bet. Homes are being snapped up by overseas buyers, sometimes with no intention of living in them, and resentment is building.

But the answer is not to rail against investment; we should channel it so it benefits Londoners. Many overseas investors are banks and institutions wanting to deposit savings somewhere safe. They are looking for long-term, low-risk, medium-return investment.

"Without radical change in the way we build homes, London will cease to be liveable for the very people who make it so successful"

We could provide that for overseas and domestic investors by setting up a pan-London investment fund that would directly finance a new generation of homes. Because they’d be built on publicly owned land, risk could be minimised and we could be more prescriptive in what is built and who it is for. Undoubtedly there should be a heavy focus on affordable homes for young professionals – people who neither qualify for housing lists nor are able to buy.

The numbers are vast; we will need to build in the region of 50,000 homes a year for the foreseeable future. This requires the consent of existing communities and sensitive planning. The current trend of hideous developments built with scant regard to neighbours can’t continue, not if we want to avoid exhausting tolerance for the sheer scale of what needs to be built. There is no excuse for ugliness.

The Government must also play its part. Unlocking brownfield land would require investment in London’s transport infrastructure, which is why the Chancellor’s encouraging words on Crossrail 2 are so welcome.

And London needs greater powers. New York retains half the taxes it raises, while London holds on to just 7 per cent. We generate funds, hand them to government and then beg for some back. The capital needs to be given more responsibility to turn its strengths to the advantage of those who make it, and the UK, strong.